Saturday, February 1, 2014

We are now run by Big Business, Big Banks, and Big Bureaucrats

Nigel Farage, leader of the surging UK Independence Party, telling the Prime Minister of Greece that he doesn't run his country:

Alas, this is not isolated to the fringes of Europe.  Bob finds an eloquent description of the same thing happening here on these shores, from Pat Buchanan of all people:
To understand why and how the Republican Party lost Middle America, and faces demographic death, we need to go back to Bush I.

At the Cold War’s end, the GOP reached a fork in the road. The determination of Middle Americans to preserve the country they grew up in, suddenly collided with the profit motive of Corporate America.

The Fortune 500 wanted to close factories in the USA and ship production abroad — where unions did not exist, regulations were light, taxes were low, and wages were a fraction of what they were here in America.

Corporate America was going global and wanted to be rid of its American work force, the best paid on earth, and replace it with cheap foreign labor.

While manufacturing sought to move production abroad, hotels, motels, bars, restaurants, farms and construction companies that could not move abroad also wanted to replace their expensive American workers.

Thanks to the Republican Party, Corporate America got it all.
I studied economics back at State U, and so I understand the arguments that maximizing trade maximizes economic output, and by implication economic output per capita goes up.  But there's a Jedi hand wave that occurs at that point: ceteris parabis, "all other things remaining the same".  They don't.  Even the Libertarians over at Reason make this hand wave.

And so we've seen the hollowing out of the American manufacturing work force, and now 12 Million immigrants will start taking barista jobs from new college graduates.  Ceteris parabus, we're net better off.  National Income per capita increases, corporate bottom lines swell, all is for the best in the best of all possible worlds.

But the ceteris is never parabus.  There are winners and there are losers.  The losers are our neighbors.

Both political parties are co-conspirators against the middle class.  Both of them

But it probably doesn't matter: like the Prime Minister of Greece, someone else is calling the shots.  The title of this post shows my thoughts on who that might be.  On good days, I can run to optimistic.  But there are days where it sure looks like we've completed the transition from democracy to oligarchy. 
VOTE, n. The instrument and symbol of a freeman's power to make a fool of himself and a wreck of his country.
- Ambrose Bierce, The Devil's Dictionary


Bob said...

Thanks for the link, Ted. Buchanan has always been a classic isolationist; not only non-interventionist, which many people think of as isolationism, but also protectionist, as well.

Dave H said...

Every time I see the words "per capita" I translate it to "for somebody else." Economic output for somebody else goes up. National income for somebody else increases.

I'm not proposing wealth redistribution, but anybody who thinks a policy that improves a per capita measurement is a good thing, needs to do his bloody homework. (Asking "what does this cost?" is a good first step.)

DontWantTo said...

Most of the winners are our neighbors, too -- even if most of our neighbors aren't winners (yet). Creative destruction is as cruel as a blizzard, but it's part and parcel of individual economic liberty. What would you do, tell the tire factory owner he/she/it cannot go out of business?

George said...

I started a reply. It turned into a post at my place. I'd be interested in your thoughts, because I struggle with this one.

Dave H said...

DontWantTo: No, but I'd ask the tire factory owner to come tell the employees that he's sending their jobs overseas because he values money more than them, instead of hiding behind layers of managers, executives, stockbrokers, and mutual funds.

Borepatch said...

DontWantTo, I'm a big fan of Schumpeter and creative destruction. But that's not what we're seeing now. Rather than newer and more efficient techniques replacing older ones (i.e. true higher national income), economic decisions are massively distorted by oppressive environmental, permitting, land use, labor regulations.

These are all pushed as political ends by self-interested organizations, i.e. no true increase in national income.

There hasn't been a free market for most of my lifetime on these shores. But in China? You want a factory? It'll be up and running in six months.

Bottom line, the "benefits" of the regulatory burden are entirely political, and the costs to our neighbors is financial. Not what I'd really classify under "Creative Destruction".

Jester said...

Borepatch you hit the nail on the head with the main post and one of your follow up posts. I would like to add this tidbit since you seem to be going in that direction. Its not only Big Businesses and .gov types as it is special interests that are inbred to both of those above systems. You mentioned that in China you can have a factory up and running in six months, where here it takes years due to regulations and the like. Well that's a huge issue and that's just the surface issue. No one seems to mind when factories with no regulations are created off shores (I'm looking at you environmental weenies. Sorta like no windfarms/light rail trains in my back yard types..) and no one checks in on how much the factories wreck where they operate. And the businesses are all to happy to go there where they can operate with both cheap labor and little to no regulation on anything. I dare say they would destroy much more environment over there than they would here. So the Green weenies push the stuff away where the pollution and labor abuse is much worse but poof its someone else's problem now right?
And as much as the Republicans have wrecked things if I'm not mistaken I think that the income disparity has grown under Democrat leadership as well as cooperate taxes paid in. Due to off shoring to avoid massive taxes or like General Electric contribute heavily to the Democrats and pay no taxes though impressive accounting departments yet never get mentioned as the bad guys that never pay enough taxes in stump speeches. Yet the party line folks never see the rot in their own side.

Old NFO said...

Regardless of how it plays out, WE are the losers... again...

Comrade Misfit said...

Free trade and globalization has done more to decimate the middle and working classes in this country than anything else that I can think of.

Other than tax policy that rewards passive investment over active efforts, that is.

Richard Blaine said...

I'm not sure we've ever had a free market. It's sort of mythic. What we have now resembles a free about as much as a Mac Truck resembles the original Mini Cooper.

Almost entirely but not quite unlike a free market is what we have.

It doesn't help to have an open market when ever other market is protectionist. Setting up rules to make free trade that only goes one direction (or mostly) is not in the long run beneficial to anyone, The short term, benefits are the problem, they are significant. I liken it to solving your starvation problem by eating your feet. Great, your not hungry now, but you've just removed the ability to hunt and gather so...

Sadly when you want to take a longer term view, someone always wants you to go a bit further than is rational. Environmentalist are so concerned about us running the planet that they feel sure we'd be better off we just froze to death in the dark.

A politician never thinks in terms of generations, they think in terms of election cycles. Any decision around and election that doesn't sound like something for nothing is BAD, and folks have always wanted to get something for nothing. Businesses are worse, they think in terms of quarters.

There is a symbiosis between politicians and big business, and the resulting critter feeds off the middle class. Sadly, it's a fatal affliction, slow, oh so slow, but fatal.

When you've converted the middle class into members of the poor, you've killed the beast. It will just stumble around making big messes until the signal that it's dead reaches the atrophied brain. Then it falls over - making another mess.